The spirit of bi­lat­er­al­ism

Enterprise - - Investment -

The bit­ter­ness be­tween In­dia and Pak­istan has of­ten led to the wors­en­ing of sev­eral long- stand­ing is­sues which could be re­solved through min­i­mum co­op­er­a­tion be­tween the two gov­ern­ments. Un­der th­ese cir­cum­stances, the pos­si­bil­ity of en­hanc­ing bi­lat­eral trade ap­pears bleak.

In­dia granted the Most Favoured Na­tion sta­tus to Pak­istan in 1996. The ges­ture, in­stead of help­ing Pak­istani trade, fur­ther lim­ited the ac­cess of Pak­istani prod­ucts into the In­dian mar­ket due to the im­po­si­tion of var­i­ous non­tar­iff bar­ri­ers by the In­dian government. In­dia had been de­mand­ing Pak­istan to give it the sta­tus of MFN as this would lead to the growth of bi­lat­eral five­fold. Pak­istan re­cip­ro­cated 16 years later by grant­ing MFN sta­tus to In­dia.

The de­ci­sion met with two ex­treme re­sponses in Pak­istan. The ges­ture was ei­ther con­sid­ered a step to­wards ad­vance­ment, re­mov­ing trust deficit and in­creas­ing bi­lat­eral re­la­tions be­tween the two and de­scribed as a step taken in the ‘ na­tional in­ter­est’ or it was viewed as ‘ na­tional sui­cide’.

Re­mov­ing the fear and mis­trust that pre­vailed about the con­se­quences of grant­ing MFN sta­tus to In­dia, their Min­istry of Com­merce said, “... the government of In­dia has re­viewed the pol­icy... and de­cided to per­mit a cit­i­zen of Pak­istan or an en­tity in­cor­po­rated in Pak­istan to make in­vest­ments in In­dia.”

Wel­com­ing In­dia’s de­ci­sion, Pres­i­dent of SAARC Cham­ber of Com­merce and In­dus­try, Shri Vikra­jit Sah­ney said, “It is a very pos­i­tive ges­ture showed by the Government of In­dia, which will give Pak­istani en­ter­prises an am­ple op­por­tu­nity to make in­vest­ments in al­most all sec­tors. Al­low­ing Pak­istan to in­vest in the global In­dian mar­ket will serve as a con­fi­dence booster, elim­i­nat­ing pre­vi­ous doubts re­gard­ing at­tack­ing the frag­ile Pak­istani mar­ket by dump­ing cheaper In­dian goods in Pak­istan. This step would al­low In­dia to ex­port 7,500 tar­iff lines to Pak­istan as com­pared to the cur­rent 2,000.”

De­spite the heav­ily mil­i­tarised bor­der, smug­gling con­stituents a ma­jor part of In­dia- Pak­istan’s un­der­ground econ­omy. The con­ver­sion of this il­le­gal trade into le­gal and of­fi­cial trade will en­sure the avail­abil­ity of cheaper prod­ucts in both coun­tries. It will stim­u­late eco­nomic ac­tiv­ity such as in­creased trans­port but the higher sales tax col­lec­tion will also en­sure higher rev­enues for both gov­ern­ments.

Although the ban on in­vest­ments in space, de­fence and atomic en­ergy will be strictly ob­served yet ex­perts be­lieve in­for­ma­tion tech­nol­ogy, health, ed­u­ca­tion and en­gi­neer­ing sec­tors of­fer tremen­dous trade po­ten­tial to both In­dia and Pak­istan. In an at­tempt to fur­ther boost trade, a sec­ond trad­ing gate­way has been opened along the bor­der, al­low­ing from a mere 150 to 600 trucks to move on a daily ba­sis. The two coun­tries have also eased visa curbs on busi­ness travel, which will fur­ther fa­cil­i­tate trade.

Grant­ing of MFN sta­tus to Pak­istan has also stim­u­lated con­fi­dence- build­ing mea­sures ( CBMs) be­tween the two neigh­bour­ing coun­tries. Such mea­sures work to­wards nor­mal­i­sa­tion of trade and there­fore stress on the erad­i­ca­tion of all dis­crim­i­na­tion in trade with In­dia by De­cem­ber 2012. Free trade al­lows Pak­istan to im­port prod­ucts and raw ma­te­rial from In­dia at a cheaper rate, which in turn helps in re­duc­ing cost of pro­duc­tion. Fur­ther­more, the in­te­grated check post ( ICP) through Wa­gah- At­tari bor­der ef­fec­tively ac­com­mo­dates in­creased cargo move­ment. Both In­dian and Pak­istani ICPs are con­nected through new gates, which al­low trade for 12 hours a day as com­pared to 8 hours in the past. The Cus­tom Li­ai­son Bor­der Com­mit­tee ( CLBC) as­sists in har­mon­is­ing cus­tom pro­ce­dures through fre­quent in­ter­ac­tions to deal with op­er­a­tional is­sues.

Keep­ing the spirit of bi­lat­er­al­ism, two Pak­istani banks have been al­lowed to open branches in In­dia. Yasin An­war, Gov­er­nor of the State Bank of Pak­istan has has said that United Bank Lim­ited ( UBL) and Na­tional Bank of Pak­istan ( NBP), have been given the ‘ green sig­nal’ to op­er­ate in In­dia.

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